BILL NUMBER: SB 981	CHAPTERED  09/27/99

	CHAPTER   521
	FILED WITH SECRETARY OF STATE   SEPTEMBER 27, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 27, 1999
	PASSED THE SENATE   AUGUST 31, 1999
	PASSED THE ASSEMBLY   AUGUST 26, 1999
	AMENDED IN ASSEMBLY   AUGUST 23, 1999
	AMENDED IN ASSEMBLY   JULY 6, 1999
	AMENDED IN SENATE   APRIL 12, 1999

INTRODUCED BY   Senator Polanco

                        FEBRUARY 26, 1999

   An act to amend Section 4420.5 of, and to repeal and add Section
4420 of, the Government Code, relating to public construction, and
declaring the urgency thereof, to take effect immediately.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 981, Polanco.  Public construction projects.
   (1) Existing law prohibits agency officials, in the case of a
public building or construction contract, from obtaining a surety
bond or insurance contract that may be obtained by a bidder,
contractor, or subcontractor on the project.  Certain agencies and
projects are exempt from this prohibition and existing law permits a
public agency to utilize owner-controlled or wrap-up insurance
programs if specified conditions are met.  Existing law also exempts
a school district from this prohibition for a construction or
renovation project and authorizes the district to use
owner-controlled or wrap-up insurance if the district determines that
the prospective bidders meet minimum occupational safety and health
qualifications and the use of this insurance will maximize the
expenditure of public funds in conjunction with the exercise of
appropriate risk management.
   This bill would repeal the existing prohibition regarding a public
agency obtaining a surety bond or insurance contract in connection
with a public building or construction contract, reenact a
prohibition against a state or local governmental agency requiring
the bidder to obtain a surety bond or insurance in connection with
the project from a particular surety or insurance company, agent, or
broker, and authorize the use of owner-controlled or wrap-up
insurance on a project for which the total cost exceeds $50,000,000
if the agency meets certain conditions and certifies that it has made
certain determinations.
   (2) Under the Local Agency Public Construction Act, school
districts must comply with specified procedures in bidding and
awarding contracts.
   This bill would provide that a contract for the addition of
air-conditioning to 150 schools in the Los Angeles Unified School
District shall be deemed to have complied with the procedures
required by the act.
   (3) The bill would declare that it is to take effect immediately
as an urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 4420 of the Government Code is repealed.
  SEC. 2.  Section 4420 is added to the Government Code, to read:
   4420.  (a) No state or local governmental agency and no person
acting on behalf of any state or local governmental agency, except a
governmental agency created pursuant to agreement or compact with
another state, shall, with respect to any public building or
construction contract that is about to be or that has been
competitively bid, require the bidder to make application to, furnish
financial data to, or obtain or procure any surety bond or contract
of insurance specified in connection with the contract or specified
by any law, ordinance, or regulation from, a particular surety or
insurance company, agent, or broker.
   (b) Notwithstanding subdivision (a), a state or local governmental
agency may use owner-controlled or wrap-up insurance with regard to
a construction or renovation project for which the total cost exceeds
fifty million dollars ($50,000,000) if the agency meets all of the
following conditions and certifies that it has made the following
determinations:
   (1) Prospective bidders, including contractors and subcontractors,
meet minimum occupational safety and health qualifications
established to bid on the project.  The evaluation of prospective
bidders shall be based on consideration of the following factors:
   (A) Serious and willful violations of Part 1 (commencing with
Section 6300) of Division 5 of the Labor Code, by a contractor or
subcontractor during the past five-year period.
   (B) The contractor's or subcontractor's workers' compensation
experience modification factor.
   (C) A contractor's or subcontractor's injury prevention program
instituted pursuant to Section 3201.5 or 6401.7 of the Labor Code.
   (2) The use of owner-controlled or wrap-up insurance will minimize
the expenditure of public funds on the project in conjunction with
the exercise of appropriate risk management.
   (3) The program maintains completed operation coverage for a term
for which the Insurance Commissioner has determined that coverage is
reasonably commercially available, but in no event less than three
years.
   (4) Bid specifications clearly specify for all bidders the
insurance coverage provided under the program and minimum safety
requirements that must be met.
   (5) The program does not prohibit a contractor or subcontractor
from purchasing any additional insurance coverage that a contractor
or subcontractor believes is necessary to protect from any liability
arising out of the contract.
   (6) The program does not include surety insurance.
   (c) Safety requirements for a project subject to this section may
be developed jointly between the agency and the prime contractor.  If
the agency requires a safety program different than the prime
contractor's usual and customary program, the program shall be
mutually agreed upon, taking into account the prime contractor's
experience, expertise, existing labor agreements relating to safety
issues, and any unique safety issues relating to the project.
   (d) This section shall not affect any provision in a collective
bargaining agreement specified in Section 3201.5 of the Labor Code
that is submitted by the prime contractor with its construction bid.

   (e) The use of owner-controlled or wrap-up insurance under this
chapter does not abrogate, limit, or otherwise affect any potential
liability that is otherwise available at law.
   (f) For purposes of this section, the following terms have the
following meanings:
   (1) "Owner-controlled or wrap-up insurance" means a series of
insurance policies issued to cover all of the contractors and
subcontractors on a given project for purposes of general liability
and workers' compensation.
   (2) "State governmental agency" means any state office, officer,
department, division, bureau, board, commission, the University of
California, or the California State University.
   (3) "Local governmental agency" means any city, county, city and
county, special district, authority, or other political subdivision
of or within the state.
  SEC. 3.  Section 4420.5 of the Government Code is amended to read:

   4420.5.  (a) Section 4420 does not apply to any construction or
renovation project undertaken by a school district.
   (b) The district may use owner-controlled or wrap-up insurance
with regard to a construction or renovation project if the district
makes the following determinations:
   (1) Prospective bidders, including contractors and subcontractors,
meet minimum occupational safety and health qualifications
established to bid on the project.  The evaluation of prospective
bidders shall be based on consideration of the following factors:
   (A) Serious and willful violations of Part 1 (commencing with
Section 6300) of Division 5 of the Labor Code, by a contractor or
subcontractor during the past five-year period.
   (B) The contractor's or subcontractor's workers' compensation
experience modification factor.
   (C) A contractor's or subcontractor's injury prevention program
instituted pursuant to Section 3201.5 or 6401.7 of the Labor Code.
   (2) The use of owner-controlled or wrap-up insurance will minimize
the expenditure of public funds on the project in conjunction with
the exercise of appropriate risk management.
   (c) For purposes of this section, "owner-controlled or wrap-up
insurance" means a series of insurance policies issued to cover all
of the contractors and subcontractors on a given project for purposes
of general liability and workers' compensation.
   (d) Any use of owner-controlled or wrap-up insurance pursuant to
this section shall be subject to paragraphs (3) to (6), inclusive, of
subdivision (b) of Section 4420 and subdivisions (c) and (d) of that
section.
  SEC. 4.  Notwithstanding any other provision of law, the contract
approved by the governing board of the Los Angeles Unified School
District in July 1998 to provide air-conditioning to 150 schools
within the district is deemed to have met the requirements of Article
3 (commencing with Section 20110) of Chapter 1 of Part 3 of the
Public Contract Code.  This section shall be operative as of the date
of approval of the contract by the governing board of the Los
Angeles Unified School District.
  SEC. 5.  The Legislature finds and declares that for Section 4 of
this act a special law is necessary and that a general law cannot be
made applicable within the meaning of Section 16 of Article IV of the
California Constitution because of the unique circumstances of the
Los Angeles Unified School District.
  SEC. 6.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order that substantial cost savings may be realized by agencies
of local government, potentially in the tens of millions of dollars,
due to the wrap-up insurance made available under this act, on
projects that may be initiated in the next few months, and that the
health of school children may be enhanced due to physical plant
improvements covered by this act, it is necessary that this act take
effect immediately.
